Illicit Uses of Cryptocurrency Gaining Attention Around the World: Expert Take

Financial investigators of over 30 nations discussed how to combat the misuse of cryptocurrencies by criminals

Almost $5.5 billion is being laundered through cryptocurrencies annually, according to Europol

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Expert Take

In our Expert Takes, opinion leaders from inside and outside the crypto industry express their views, share their experience and give professional advice. Expert Takes cover everything from Blockchain technology and ICO funding to taxation, regulation, and cryptocurrency adoption by different sectors of the economy.

Newer cryptocurrencies such as Cloakcoin, Dash, PIVX, and Zcoin have built in mixing services as a part of their Blockchain network. Monero, drug dealer’s favorite crypto, provides anonymity without tumbling services due to its privacy-centric Blockchain design. Therefore more effort needs to be placed upon the monitoring cryptocurrencies with privacy or mixing services features, crypto mixers and tumblers since they can impede tax collection, anti-money laundering practices, and law enforcement agencies.

In the aftermath of this workshop, many regulatory agencies around the world, including the US, EU, Japan, and Australia, stepped-up their fight against "financial crimes" utilizing cryptocurrencies.

European Union (EU)

The 45 member committee of the European Parliament will launch an investigation into money laundering and tax evasion related to the digital economy that thrives in the shadows of tax havens. On February 7 2018 the EU Parliament voted to create a committee provisionally entitled Taxe 3, that will investigate for the first time tax privileges established under citizenship programs or non-dom regimes offered by Portugal, Italy, Malta, the United Kingdom, Cyprus as well as crown dependencies and overseas territories.

Since the power to levy taxes is central to the sovereignty of the EU Member States, which have assigned only limited competences to the EU in this area, Taxe3 will need to be confirmed by a plenary vote in March in order to undertake the financial crimes inquiry within the next twelve months.

United States (US)

The US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) regulates cryptocurrency exchanges under existing legislation for money transmitters. It also requires US holders of a financial interest in or signatory authority over foreign financial accounts (including crypto denominated accounts) to file a foreign bank account report titled FinCEN 114 if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year. FinCEN has indicated that it is “aggressively” pursuing cryptocurrency tax evaders and platforms that lack strong internal safeguards against money laundering– even those located outside of the US.